Friday, April 25, 2014

Boxed out

It had been so long since I'd last visited our safe-deposit box in the subterranean vault at my neighborhood bank that the clerk had no record of it.

But my best guess, judging from the dates on the legal documents and labels on the floppy disks (!) I found squirreled away there, is late 1990.

And the only reason it wasn't longer is that we recently received a letter saying that the Bank of America branch at the Six Corners intersection on the Northwest Side was relocating and discontinuing its storage service, and warning those of us with boxes there that if we didn't come fetch our valuables, employees were going to drill them open and move the contents to a "central storage facility."

What I saw on my rescue mission looked like the "after" scene in a heist movie — the walk-in vaults flung wide, more than 10,000 little security doors gaping open, their interiors rifled.

By the end, a bank spokeswoman told me, less than 20 percent of the boxes were rented. The rest had apparently fallen victim to modernization. Bank customers now digitize their important documents and photos and store them in multiple places on the Internet. They do nearly all their banking online and so don't feel a connection to a particular building or branch. And they believe, rightly or wrongly, that home safes are adequate for their security needs.

Though my relationship with banks is now very arms-length, I have vivid childhood memories of regularly going with my mother, being ushered by armed guards into the daunting inner sanctum and swapping out whatever important things needed swapping out. (Were they deeds? Titles? Jewels and coins? I asked her this week, but her memories of these visits aren't as vivid.)

This sense of the safe-deposit box as a totem of responsible security inspired me to rent a box myself shortly after the birth of our first child, as much a gesture of caution and maturity as an act of necessity — why, for instance, did I store in it our original certificate of marriage? Literal hell or high water didn't threaten that.

But since then, I confess, it's been sheer, pathetic inertia that's kept us paying rent — $56 a year lately for the smallest available size — protecting our easily replaceable stuff.

"They're just not in vogue anymore," said Jerry Pluard, owner of Elgin-based Safe Deposit Box Insurance Coverage LLC. He estimated that about half of the nation's safe-deposit boxes are sitting empty but noted that the lack of industry research and data on the subject makes all such assessments simply best guesses.

It's Pluard's best guess, however, that the decline has leveled off and that reports of the demise of the safe-deposit box — "On the way to oblivion," said a Crain's New York Business headline last year; "A relic," wrote The Boston Globe in March; "Obsolete," added USA Today this month — are overblown.

"It's mostly bigger banks where I've seen the falloff," Pluard said. "They open new branches that don't offer safe-deposit box services. But business is still good at smaller, community banks, and demand is still high for the biggest boxes." He added that he's "noticed a growth in private-vault companies that aren't affiliated with banks," which might explain the perception that the safe-deposit box is a "dodo bird," as the New York Daily News wrote last year.

These private companies are analogous to self-storage locker businesses. Those have boomed in recent decades, suggesting that we're still interested in keeping our stuff safe, but that our stuff has just gotten larger.

For the record, bank-industry consultant David P. McGuinn, founder and president of Houston-based Safe Deposit Specialists, said it's his observation that "usage is as high as it ever was."

But it's a hard case to make to those of us who have wandered in the lonely vault at the Six Corners Bank of America. Our safe-deposit boxes are now bank-issue plastic bags sitting in our in-boxes, their contents waiting to be filed and stashed away, maybe for another 24 years.

Comments

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The main thing I have used them for is storing my passport and things like savings bonds and stock certificates, which I guess are technically replaceable but sort of a pain (and can cause a lot of trouble if they fall into the wrong hands).

Used to go to the bank in my hometown with my father. The bank had marvelous architecture, with columns in the front, and a marvelous open first floor, and offices accessible by a balcony on the second. Everywhere adults doing adult things. It was a very important place, that bank. My dad always went in to deposit his paycheck and get some cash. Every Saturday. I always got a sucker. Yes, they had safe deposit boxes, and a "motor drive-thru", as it was called.

All gone now, of course. Some hideous glass building now, and the old hometown bank became Capital One some years ago.

I'm with Beth and blahedo for the contents of my box. In addition, we have a supply of cash for emergencies. Admittedly if the digital money network goes down, our bank will be locked, and we won't have access to the box either. It's a flawed plan, for sure.

As a banker for the last 36 years, I can give you my insight. Safe Deposit boxes are a loss leader for banks. The upkeep and space are very expensive. And the rent charged is dirt cheap. Most boxes are 3 x 5 and are usually $25-$30 per year. Vacancies are huge. The estimate of 20% used is accurate, maybe a little higher for community banks. Fire proof boxes are much more convenient. Most people keep garbage in their boxes. I've had to drill and audit the contents of many boxes. Finding anything of real value was rare.

The landscape of banking has changed so much. PNC is launching kiosk banks whereby every transaction is handled by one person. I used to run an office for a bank in Rogers Park and my staff consisted of 12 employees.The same facility today has 5-6 employees. Banks are happy that the salary expense has been reduced. Getting rid of Safe Deposit boxes is another reduction that banks are smiling about.

It was Bank of America, right? They probably acquired the safe deposit boxes knowing that they acquisition represented $9MM in losses and without telling the shareholders that little fact. Was Ken Lewis involved?

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